Multiple Choice
Starting from an initial long-run equilibrium, under the rational expectations hypothesis, an anticipated shift to a more expansionary policy will increase
A) prices but not real output in the short run.
B) real output but not prices in the short run.
C) real output in the long run but not in the short run.
D) real output in both the long run and the short run.
Correct Answer:
Verified
Correct Answer:
Verified
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